Lake Resources NL (ASX:LKE, OTCQB:LLKKF) has executed a conditional framework agreement (CFA) with WMC Energy BV for the offtake of up to 25,000 tonnes per annum of battery-grade lithium from the Kachi Project in Argentina and a 10% investment by WMC in Lake.
Key terms of the CFA are:
- A 10% investment in Lake at A$1.20 per share to support the realisation of the Kachi Project;
- Offtake of 50% of Kachi project lithium product up to 25,000 tonnes per annum of LCE;
- An initial offtake term of 10 years with an option to extend the term with an additional five years; and
- Offtake to be priced on an agreed market price formula based upon the average quoted price in the quotational applying a discount.
“Environmentally friendly fashion”
Lake’s new CEO and MD David Dickson stated that the CFA cemented the ability of Lake to scale up the production of LCE in an environmentally friendly fashion and offered partners like WMC an opportunity to participate in Lake’s other projects.
As Lake moves to develop these adjacent projects, a growing supply of high-quality lithium products becomes available to WMC and its partners and customers across the US and Europe.
“Increasing customer and consumer scrutiny around the environmental and ethical credentials of lithium projects particularly from the European markets drives our focus on sustainable extraction,” Dickson said.
Long-term strategic alignment
Lake executive chairman Stu Crow said: “The CFA delivers a long-term strategic alignment with WMC and its supply chain into its European and North American customers.
“WMC Energy has a track record of being a market leader in nuclear fuels and expanded into battery materials including lithium to serve predominantly the US and European lithium-ion battery supply chain for EVs with their strategic needs.”
About WMC Energy
WMC Energy was incorporated in 2016 in Amsterdam, originally to provide supply chain solutions in the nuclear fuel industry.
In 2021, Sprott Asset Management (TSX:SII) selected WMC Energy to be the physical manager of the Sprott Physical Uranium Trust.
With the help of WMC Energy’s uranium trading team, the trust grew from US$600 million at IPO inception in 2021 to almost US$3 billion in total net asset value today.
In 2020, WMC expanded into the battery materials sector by offering fixed price forward sales solutions and through the development of project-financed physical assets in the lithium-ion battery material space under its Liminal brand.
In addition to its own physical asset developments, WMC Energy actively pursues greenfield and brownfield mining-related physical offtake agreements, from time to time connected with facilitative capital investment.
WMC director Amrish Ritoe said: “WMC is excited to support Lake Resources in its endeavours to make the Kachi Project a success.
“The engagement under the CFA will help Lake Resources expand its downstream footprint across the European and North American lithium-ion battery supply chain, enabling Lake to optimally benefit from the anticipated growth in demand for battery materials like lithium carbonate across these markets.
“With our extensive network in Europe and North America, we are well positioned to create a partnership with Lake and others that will help Lake to accelerate the development of the Kachi Project.”